Ezel / IRS Rulings / 201248017

CCA 201248017: Chief Counsel explains which partnership partners are bound by a settlement

Number
201248017
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Settlement Agreement
Topics
Procedure, penalties, and administration
Code sections
§ 6224, § 6226
Ruling dated
April 9, 2012
Publicly released
November 30, 2012
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2012, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2012
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that a tax matters partner could bind certain partners through a partnership settlement only within the limits of section 6224 and its regulations. Notice partners had to sign if they, and indirect partners holding interests through them, were to be bound. Partners who did not settle would remain subject to a final partnership administrative adjustment disallowing the described losses, while settled partners would not be subject to that adjustment.

Ruling snapshot

  • Question: Which partnership partners must sign a settlement agreement to be bound, and what happens to partners who do not settle?
  • Outcome: Advice
  • Key authorities: IRC §§ 6224 and 6226; Treas. Reg. § 301.6224(c)-1

Full text (IRS public release)

ID: CCA-409144-12 Number: 201248017
Release Date: 11/30/2012
Office: ---------
UILC: 6224.01-01

From: --------------------
Sent: Monday, April 9, 2012 2:41 PM
To: --------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
------------------
Subject:906 Question - ------- -

Under section 6224(c)(3) the TMP can only bind partners with less than a 1 percent interest in a partnership with more than 100 partners. Also, under Treas. Reg. 301.6224(c)-1(b), if the TMP cannot bind a pass-thru partner, he cannot bind any indirect partner holding an interest through the pass-thru partner. Under the last sentence of section 6224(c)(1), a settlement agreement by a pass-thru partner binds its indirect partners.

Thus, all notice partners must sign if they (and any indirect partners holding an interest through them) are to be bound.

Any partners who do not settle would be bound by an FPAA disallowing losses in years 1, 2 and 3. Settled partners would not be subject to the FPAA. See I.R.C. 6226(d)(1)(A). ------------------------------------
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